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Miscellaneous Schedule C Deductions
In the notice of deficiency, respondent disallowed a number
of Schedule C deductions that petitioners claimed on their 1991
and 1992 tax returns. They include investment losses, interest
expenses, travel expenses, commission expenses, and dues. In the
March 20, 2000, settlement, petitioners conceded these deductions
in full. We conclude that respondent's position was
substantially justified.
Amount of Reasonable Attorney's Fees and Costs
We now consider the amount of costs that petitioners may
recover. Petitioners were the prevailing party with respect to
issues involving the deductibility of losses from Diplomat
Associates. They were not, however, the prevailing party with
respect to any other issues.
Administrative costs are those incurred in connection with
an administrative proceeding within the IRS. Sec. 7430(a)(1),
(c)(2). Reasonable administrative costs consist of any fees or
expenses imposed by the IRS, the reasonable expenses of necessary
expert witnesses, the reasonable cost of any necessary study,
analysis or report and reasonable fees paid or incurred for the
services of attorneys. See sec. 7430(c)(2). Attorney's fees are
those "for the services of an individual (whether or not an
attorney) who is authorized to practice before the Tax Court or
before the [IRS]". Sec. 7430(c)(3).
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